I can't tell from your description whether this is relevant, but there have been posts from others complaining of freezes when using the browser. In the two cases I'm remembering, the trouble was traced back to folders of LOTS of images that were left open. And I'm talking big folders. If you've got any on your hard drive that contain a lot of image files - especially large PSD or TIFF files - break them down into smaller chunks and make sure the folders are closed in the browser before you exit Elements. In one case, Elements wouldn't even open without freezing because it hung up on generating a huge number of thumbnails. If any of this applies to you, "erase" the problem by deleting the Elements Preference folder, which, essentially, will leave you with nothing besides closed folders.
Oh, to delete the Preferences: With Elements closed, click on the start up icon and then make a quick grab for the Control, Alt, and Shift keys. Hold all three down until you get a screen asking if you want to delete the Settings. Say Yes.
Different people make use of My Pictures in different ways. I had to go in to my hubby's XP My Pictures folder and teach him how to use sub folders. He kept cramming everything in there without any subdivisions. Not good for Elements, and probably not an ideal way to manage files when it comes time to do backups, either.
I can't remember how application memory is handled in XP. Can the amount allocated to Elements be increased? If so, you might try that, too.